Ethics & Public Policy Center

It’s Already Too Late to Avoid the Train Wreck

The good news for the Obama administration is that Jeffrey Zients, the management consultant turned economic advisor, bought them a month on Obamacare implementation. He did so by announcing that the dysfunctional online enrollment and subsidy determination system was not fatally flawed and could be fixed, or at least mostly fixed, by the end of November.

Of course, the administration repeatedly assured Congress and the media that the website was going to be ready to go on October 1, too, and the public has now seen how well that turned out. But Zients was not part of the previous cheerleading effort, and so the media is inclined to believe him when he says a fix is around the corner—at least until proven otherwise by actual performance on December 1.

But securing a month’s reprieve came with a cost too. Zients’ announcement has signaled to millions of people that it is not worth it to try and navigate the Obamacare web sites before December 1. Why bother when a better, more user-friendly, and reliable system is supposedly in the offing at the end of the month? For all intents and purposes, therefore, the first two months of the open enrollment season for Obamacare have been lost. The administration has already admitted that October’s numbers will be embarrassingly low, and November’s are all but certain to be similar.

The Obama administration wants to play down the significance of this delayed launch of the program by emphasizing that the open-enrollment season lasts a full six months, until March 31, 2014. But that’s very misleading. The original October 1 launch was chosen for a reason, which was to give those Americans losing their current individual market insurance plans on January 1, 2014 plenty of time to find and secure a new insurance plan well before December. With October and November lost, the administration is now banking on moving several million Americans through the insurance enrollment system over a two-week period in early December. Beyond that timeframe, it will be nearly impossible to process the enrollments fast enough to prevent breaks in insurance coverage at the beginning of 2014.

The administration has no one to blame but itself for the predicament it is in. The president and his team spent the last year fighting off all attempts to delay the launch of the exchanges because they feared a one-time delay might lead to more delays in the future. They also purposefully wrote the law and regulations to force millions of people in the individual insurance market out of their plans starting at the beginning of 2014. Estimates are that about 4 million people have already received notices that their plans are being cancelled early in 2014, and many more will receive such notices in the coming months.

The immediate problem for the administration is that even with a perfectly functional enrollment and data transmission system, it would be challenging to process new insurance enrollments of 4 million or so people in a two week period. Given the track record of healthcare.gov to date, it is highly unlikely that the system will be able to handle that much volume in that short of a time frame.

Moreover, it is also completely unrealistic, not to mention unreasonable, to expect so many Americans to suddenly become comfortable again with healthcare.gov, enter their personal financial information into it, and then select an insurance plan—in just a two-week period. For starters, contrary to the president’s assertions, many of the current enrollees in individual market plans will not be impressed by the premiums, cost-sharing requirements, and provider networks of the exchange plans. If and when the web site becomes more operational, the administration will face another political firestorm from the rate shock that is built into Obamacare’s cost structure.

And yet, the administration would like us to believe that, once the tech wizards work their magic, it will all be smooth sailing. In effect, the Obama administration wants us all to believe that the system is going to be prepared to go from today’s dead stop to 100 miles per hour in a matter of days, with no risk whatsoever of a crash. Who wants to take that bet?

So, even if Zients is right and healthcare.gov will be minimally functioning in three weeks, it is simply not possible at this point to avoid at least a partial train wreck—one with very real casualties. The compressed time frame now makes it certain that some very large number of Americans—probably in the millions—will experience a break in insurance coverage at the beginning of 2014 absent a significant shift in policy. And the culprit is Obamacare.

This is undoubtedly the reason the president said, in his interview with Chuck Todd, that the administration is now looking for a possible fix for the problem of cancelled individual insurance market plans. They know that it is too late to get all of these people into exchange plans by January 1, and they are looking for a way to buy themselves, and the individual market participants, more time. More than likely, they will try to work with the major insurers on a one or two month fix.

This is all the more reason that Republicans should keep pressing the case for a broader, legislative remedy for those losing their plans today. The bills under consideration in the House and Senate would allow insurers to keep offering the plans they are offering today in the individual market through 2014 based on the insurance rules in effect in the states in 2013. This would eliminate the premium increases associated with Obamacare’s new insurance rules and keep open a real alternative to the plans offered in the Obamacare exchanges. Some insurers will argue that it’s too late for this kind of remedy, and it’s certainly true that there will be some cost to re-opening plans that were planned to be closed. But, given the alternatives, it is the only viable option to avoid a real problem for millions of families. What the Republicans should be insisting on is a full-year fix, not the one or two month reprieve that the administration is likely to pursue through administrative action.

The Obama administration is in a very dangerous place. The policies it has pursued have now put at risk the health insurance of millions of people. Their current defense—that all will be well in December—is not good enough because many Americans will still experience a break in coverage even if things are running perfectly in December. Holding the line at no changes and no delays is therefore no longer a viable option for the president and the law’s defenders. Something is going to give, and soon.

James C. Capretta is a senior fellow at the Ethics and Public Policy Center and a visiting fellow at the American Enterprise Institute.